Despite the fact that Credo Technology Group Holding Ltd (NASDAQ:CRDO) stock rose 12% last week, insiders who sold US$13m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$17.32, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Credo Technology Group Holding

The Last 12 Months Of Insider Transactions At Credo Technology Group Holding

The President, William Brennan, made the biggest insider sale in the last 12 months. That single transaction was for US$8.8m worth of shares at a price of US$17.50 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$22.31. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 13% of William Brennan's stake.

Insiders in Credo Technology Group Holding didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Credo Technology Group Holding insiders own 16% of the company, currently worth about US$565m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Credo Technology Group Holding Insiders?

The fact that there have been no Credo Technology Group Holding insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Credo Technology Group Holding, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Credo Technology Group Holding. In terms of investment risks, we've identified 1 warning sign with Credo Technology Group Holding and understanding it should be part of your investment process.

But note: Credo Technology Group Holding may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.